Causes of DG: Global Players Flashcards
International Organisations - UNN, IMF, World Bank.
They monitor and provide investment, they can provide investment for economic and social projects to improve standards. Generally seen as top down with little regard for local needs.
TNCs
Largest of these match some countries in terms of wealth and power. They are driven by the need to maintain profits and reward shareholders. Traditionally they have located to developing countries or NICs for cheap labour. However the BRICS countries are developing their own large corporations.
International Organisations - WTO, Economic trade blocs such the EU
They promote trade and economic cooperation between countries. They can promote trade between developed and developing countries, they can raise standards of business practice and improve competitiveness, they can encourage trade dependency.
International commercial - TNCs such as Nike, Nestle and LG
They are capitalist enterprises that create supply chains which spread across the world. They provide employment and investment, may exploit workers in developing countries to maximise cheap labour.
National political - Governments
They influence economic and social conditions in their country. They regulate the economy, attract inward investment and maintain competitiveness, provide physical infrastructure, public services…
NGOs - charities such as Unicef, Oxfam
They raise awareness of concerns, give aid. They can be involved where politics keeps out governments. A bottom up approach which takes into account local needs, they rely on funding which may be unreliable.
CASE STUDY: Impact of TNC mining activity in Botswana
In 2006, mining accounted for 40% of GDP, almost all the mining companies are wholly owned by TNCs or operated as joint ventures between governments and TNCs. Diamonds account for about 80% of Botswana’s total exports between 2001-2005.
Since 1975, GDP per capita has increased from 800 US dollars to 16,500.
Still problems in Botswana?
Outside the mining industry there is unemployment and conflict in areas where mining, cattle rearing and tourism try to coexist.
Trade flows
Increasing exports can help a country narrow the development gap.
In the last 20 years developing countries have moved into manufacturing which has meant a change in the nature of the North-South trade relations.
Trade flows-economic globalisation
Has had a big impact on the flows of goods between countries. Some countries have had large increases in trade while others have not. Although the volume of international trade increases each year, it is often dominated by wealthy countries in EU, North America and East Asia. Over 80% by value, of all exported goods come from these three regions, only 2.5 comes from Africa.
Terms of trade
A countries terms of trade is the ratio between the currencies earned from it’s exports and the price of imports. Generally, the prices for raw goods has fallen due to an increase in manufacture goods, this adds value to the commodity. Therefore any country that exports raw foods but imports manufactured is likely to have declining terms of trade. Often the poorest countries are in this situation.
CASE STUDY: Trade patterns in coffee.
Only second to oil as a source of foreign exchange for a number of developing countries. Most of the world’s coffee is exported to high income countries. TNCs such as Nestle dominate the industry, making it difficult for small farmers to get better prices. The price also fluctuates, this trend has been downwards which has had a significant economic, social and environmental impact on many developing countries.
